NEW YORK – Gold edged lower from near record-high levels after Israeli strikes on Iran over the weekend appeared to be more restrained than many expected.
Bullion traded lower on Oct 28 after Israeli planes struck military targets across Iran on Oct 26, avoiding oil and nuclear facilities. Tehran didn’t immediately vow to respond, with the latest developments possibly reducing some haven demand.
Gold has surged by more than 30 per cent this year, peaking at an all-time high of US$2,758.49 last week. The rally intensified in recent months due to geopolitical tensions in the Middle East, while traders are assessing risks from the upcoming US presidential election.
Money managers have also played their part, with hedge funds raising net-long positions in gold and investors adding to exchange-traded fund holdings.
Oil also fell, tumbling more than 5 per cent in early Asian trading after the Israeli strikes on Iran avoided The Organisation of the Petroleum Exporting Countries (Opec) member’s crude facilities.
Brent slumped below US$73 a barrel and West Texas Intermediate sunk near US$68 on Oct 28.
Iranian state media said the country’s oil industry activities were working normally.
Oil has been buffeted by geopolitical risks in the Middle East, ample supply and lackluster demand growth in China. Profits at the nation’s industrial firms over the weekend highlighted the weak outlook for the world’s biggest crude importer, despite recent government stimulus.
Israel’s “retaliation on Saturday was mostly viewed as underwhelming and proportionate,” said Harry Tchilinguirian, group head of research at Onyx Capital Group. “Poor macroeconomic realities centered around China will take over the narrative again to push the oil price lower.”
Market metrics, however, still show traders remain on edge. A gauge of implied volatility for Brent is hovering near the highest in a year, and options
